NBP: Play for Result Rally

Over the last five years, National Bank of Pakistan (NBP) stocks outperformed the market in December to February period (excluding last year where bank posted dismissal performance), thus we expect announcement would create excitement among investors. We expect company to announce dividend of Rs 5/share. NBP is currently trading at 2015E PBV and PE of 0.81x and 8.2x respectively. At current levels, we have positive stance as stock provide 12% upside potential to our June’15 target price of Rs 75/share.

Earnings up 107% YoYBank posted robust growth in earnings by 107% as profit after taxation clock in at Rs 12.06 billion (EPS: Rs 5.67) compared to Rs 5.82 billion (EPS: Rs 2.74) in 9MCY13. The sharp rise in profitability was on back of lower provisions, rise in non-funded income and higher net interest income. However in 3QCY14 profitability decline by 21% to Rs 3.93 billion (EPS: Rs 1.85) in 3QCY14 against Rs 4.98 billion (EPS: Rs 2.34) in 2QCY14 owing to decline in non interest income and lower reversal of provisions.